KUALA LUMPUR (June 18): Shares of Top Glove Corporation Bhd rose in early trade today on the back of the company’s stellar third quarter financial results.
At 9.06am, Top Glove jumped 17 sen to RM6.04 with 375,200 shares done.It was among the top gainers in early trade today.
Top Glove recorded a 71% increase in net profit for its third quarter ended May 31, 2015 (3QFY15) at RM72.27 million from RM42.37 million a year earlier on higher sales volume amid a weaker ringgit versus the US dollar.
In a filing with Bursa Malaysia, Top Glove (fundamental: 2.5; valuation: 1.3) said revenue rose to RM661.19 million from RM574 million. As the export-based firm sells its gloves in US dollars, a weaker ringgit translates into higher income upon conversion of its US dollar-denominated sales into the Malaysian currency.
Year to date net profit stood at RM177.03 million versus RM134.2 million a year earlier while revenue increased to RM1.8 billion from RM1.7 billion.
Top Glove declared a dividend of eight sen per share for the quarter in review.
Meanwhile, Hong Leong IB Research has upgraded Top Glove Corporation Bhd to “Buy” (from Hold) at RM5.87 with a higher target price of RM6.62 (from RM5.42) and said Top Glove’s 9MFY15 revenue of RM1.8 billion (up 6.2% year-on-year) was translated into adjusted PATAMI of RM193.5 million (up 32.0% y-o-y), accounting for 82.1% and 91.2% of HLIB and consensus full year estimates, respectively.
In a note today, the research house said that apart from favourable currency and raw material prices, Top Glove had reported a record high result due to higher efficiency of its production lines which in turns lead to improved margins for both nitrile and natural rubber glove.
“We lifted our target price from RM5.42 to RM6.62 post earnings upgrade. Since potential total return to our new TP and projected yield is 16.0%, we upgrade the stock from Hold to Buy.
“Moreover, with improved margin (to record level) as well as the discount valuation gap to peers, Top Glove is now our preferred pick of the sector,” it said.